Increasing demand for timber is a major threat to forests worldwide. Only one-fifth of the world's original forest cover is intact today. Yet United Nations data show that global wood consumption increased by 40% between 1970 and 1996, and continues to grow.

Inhabitants of the US, Japan, and western Europe consume on average about 10 times as much per person as the average citizen of a developing country, even accounting for the fact that many more of the latter use wood for fuel.

Against this backdrop of global forest loss, world leaders will gather this week in Seattle to debate, among other issues, US-led proposals to further promote global trade in wood products. The move is part of a raft of measures for consideration at the World Trade Organisation (WTO) ministerial summit, which many hope will launch a millennium round of free-trade talks.

Proponents stress that free trade can be good for forests because it enhances the global competitiveness of more efficient producers. This would be fine if all else were equal. Unfortunately, many governments provide outlandish subsidies and tax breaks to the logging industry. In Canada and Indonesia, these run to billions of dollars each year.

Worse, a number of countries have weak environmental laws, and many - especially in poorer parts of the world - rarely enforce the laws they do have. Some of the world's most important timber exporters - including Indonesia, Russia, Brazil and Cameroon - turn a blind eye to rampant illegal logging, bribery and corruption in the forest sector.

A new report by the World Resources Institute and the Centre for International Environmental Law concludes that the new WTO proposals could, as a result of such failings, put yet more pressure on forests in Amazonia, the Congo Basin, south-east Asia, and the northern Boreal region. These forests are the home to most of the world's terrestrial biological diversity, and to hundreds of unique, traditional cultures.

The wealthy nations leading the charge for the timber trade - including the US, Canada, New Zealand and Indonesia - have paid scant attention to the potential negative environmental and social side effects of their actions. Perhaps this is because large, powerful forest products companies in these countries stand to benefit directly from the plan.

Europe and Japan have voiced opposition to the proposals, but not for the right reason. Their concern is more with protection of less efficient European and Japanese timber processing companies fearful of foreign competition. Inefficiency isn't good for forests either as it promotes waste of precious raw material and forces customers to pay more for products that might otherwise be available more cheaply.

But perhaps we can enjoy the benefits of free trade with less of its troubling side effects. This depends on countries choosing to accompany trade liberalisation with parallel progress on forest protection.

No significant progress has been made in 10 years of intergovernmental talks at the UN on slowing global forest loss. Debate has been deadlocked over whether or not to pursue a global forests convention and how to pay for forest conservation in poor countries. Connecting the trade and forest negotiations could break the diplomatic logjam.

As the world's cash-rich push the trade agenda, they should also convene a joint conference with those most rich in forests and offer financial support to help cover the costs of a shift from short-term exploitation to long-term conservation. The G7 should create a global forest protection fund, expanding the kitty they created - led by Margaret Thatcher and Helmut Kohl at the Houston summit in 1990 - to conserve rainforest in Brazil. Such a fund could help with management of reserves, promotion of non-destructive eco-tourism and sustainable forest management. In coming decades, these might generate more jobs and revenue than logging.

Much can also be done directly through the trade talks to reduce pressure on forests. A first step would be to eliminate logging industry tax breaks that encourage inefficiency and harm the environment. Members of the WTO should agree on phase-out targets for tax breaks as an integral part of any free trade package.

A second step would be to nurture reform of market mechanisms by encouraging the free flow of information to help ensure that consumers can choose to buy products from well-managed forests, rather than from those which have been pillaged with scant regard for environmental and social impacts. Eco-labelling schemes, such as that developed by the Forest Stewardship Council, show that such systems can work.

About a quarter of wood products retailed in the UK will be labelled under this initiative by the end of the year. Some free traders have sought to use WTO rules to outlaw eco-labelling as a "trade barrier". Members of the WTO should, on the contrary, embrace and encourage this market-led effort.

Such steps require putting forests and other environmental issues alongside trade, high on the list of global policy priorities. The leaders going to Seattle - including the British government's Michael Meacher - still have time to make such bold moves.

They should call for the WTO to become a citizen-friendly organisation that brokers progress on issues where there has been only stagnation and business-as-usual. Too much is at stake both for the global trading system and for the planet's ecosystems - without which there would be little to trade - to let this opportunity slip by.

Nigel Sizer is director of forest policy with the World Resources Institute, Washington DC, an international research organisation focusing on issues of environment and sustainability.